Small banks are being hampered from joining the Bank of England’s Funding for Lending Scheme by red tape, according to one boutique lender.

Paul Lynam, head of Secure Trust Bank, said the bureaucracy of signing up for FLS and its bias to mortgage lending had put his firm at a disadvantage against the high street giants.

‘We applied for FLS shortly after it was announced,’ he said. ‘We first had to go through a long-winded process to have a facility set up.

‘By the time we got the facility sorted we were well down the waiting list behind other banks.’

The scheme involves banks providing collateral such as business loans or mortgages in return for low-cost lending from the Bank of England, which is then passed on to new borrowers.

Lynam said that the major banks already had established borrowing facilities with the Bank of England as bigger players in the mortgage market and had an advantage over smaller banks in providing suitable collateral.